Given below is an excerpt from a management performance report:

Budget Actual Difference

Contribution margin $1,000,000 $1,050,000 $50,000

Controllable fixed costs $ 500,000 $ 450,000 $50,000

The manager's overall performance

a. is 20% below expectations.

b. is 20% above expectations.

c. is equal to expectations.

d. cannot be determined from information given.

The answer is b. manager's overall performance is 20% above expectations.

Explanation:

The budget overall performance is: Budgeted Contribution margin - Budgeted Controllable fixed costs = 1,000,000 - 500,000 = $500,000;

The Actual overall performance is: Actual Contribution margin - Actual Controllable fixed costs = 1,050,000 - 450,000 = $600,000;

Variance in dollar term of actual overall performance over budget overall performance = $600,000 - $500,000 = $100,000

% variance of actual overall performance over budget overall performance = 100,000/500,000 = 20%

Thus, actual overall performance is 20% above expectation.